Shell CEO Defends Pullback From Clean Power

Updated: Oil and gas giant Royal Dutch Shell made headlines over the last few years for “going cold” on solar, wind and hydrogen energy. The energy conglomerate said it was backing off of future investments in various clean energy sources — other than biofuels — and pulled out of some high-profile clean energy projects, including, in 2008, the world’s biggest planned offshore wind farm to be built in Britain. But at the Wall Street Journal Eco:nomics conference on Thursday, Royal Dutch Shell CEO Peter Voser defended Shell’s investment strategy in renewables, saying that the total R&D spending on clean power at Shell has not changed in recent years but that the company is focusing its efforts.

“Money-wise, the budget hasn’t changed,” said Voss, stating that Shell invests 25 percent of its R&D and technology budget on alternative energy. But as the Wall Street Journal moderator pointed out, that’s a “tiny portion” compared to the overall capital spending on fossil fuel energy.

“What has happened is that we’ve narrowed the options somewhat,” Voss said. Shell is focusing on alternative energy that is close to its current business, like biofuels, he said. Earlier this month Shell announced plans for a $12 billion joint venture with Brazilian sugar producer and ethanol developer Cosan to create alternative transportation fuels.

Of course, Shell wants to keep investing in clean energy technology that can stand on its own, and makes the company money. Shell owns 11 wind farms in the U.S. and Voss said that “wind survives on its own today.”

In contrast Shell decided that its solar investments just weren’t surviving on their own. It decided to leave solar PV and thin-film solar technology development to the smaller- and medium-sized companies as “we don’t see that being something we can scale,” said Voss.

While Shell might technically be keeping its small R&D spending on alternatives going, it clearly hasn’t won over mind share in green technology as of late. During Voss’ talk a member of the audience asked: Why has Shell moved from being a leader in green technology to a company that has fallen behind?

One reason is that Shell has not seemed to make many partnerships or investments with green tech innovators. Other oil companies, like Exxon, have made high-profile partnerships with companies like Craig Venter’s Synthetic Genomics to work on algae fuel. Chevron’s venture capital arm, which isn’t all that active, has invested in a variety of companies like solar thermal company BrightSource, biofuel technology company Codexis, and thin-film company Konarka. Update:Shell has also invested in Codexis.